Mexico Will Defer Oil Exploration Projects to Slash Spending

The state-run oil company, Petroleos Mexicanos, said Monday it will slash spending 22 percent and cut unprofitable production about 100,000 barrels a day as it struggles with liquidity problems and past-due payments to suppliers.

Oil worker Vicente Gonzalez looks up as the drill is pulled upwards on the Centenario deep-water drilling platform off the coast of Veracruz, Mexico, in the Gulf of Mexico, on Nov. 22, 2013. AP Photo/Dario Lopez-Mills

MEXICO CITY—The state-run oil company, Petroleos Mexicanos, said Monday it will slash spending 22 percent and cut unprofitable production about 100,000 barrels a day as it struggles with liquidity problems and past-due payments to suppliers.

The company, known as Pemex, said it will cut $5.5 billion from its 2016 budget, delay deep-water exploration and decrease production of super-heavy crude because of low world oil prices.

Delaying production and exploration projects will account for about two-thirds of the $5.5 billion spending cut.

Pemex still faces a serious issue: It owes suppliers almost $7 billion, a debt the company acknowledges is a problem.

Pemex is facing liquidity problems, but not one of solvency.

— Jose Antonio Gonzalez, general director, Pemex